Originally Syndicated on May 13, 2023 @ 9:08 am
Russia has filed a lawsuit against billionaire oligarch Andrey Melnichenko, accusing him of illegally acquiring a controlling stake in an energy company. The lawsuit is the latest move by the Russian government to target wealthy individuals who have been critical of the war in Ukraine.
Russian authorities have initiated legal action against Andrey Melnichenko, a billionaire Russian oligarch, to seize control and nationalize one of the corporations within his extensive metals and mining business empire. The lawsuit revolves around claims that the acquisition of this company, which took place five years ago, was tainted by corruption.
These allegations from the state authorities emerge amidst a broader campaign orchestrated by the Kremlin to encourage affluent Russian individuals to repatriate their wealth and business enterprises. Figures like Melnichenko, who has built a strong base in the UAE, are under pressure from this increased push. Notably, he has even stationed a superyacht worth $300 million there. This strategic campaign by the Kremlin follows Russia’s significant military intervention in Ukraine 18 months ago. The Russian government has employed a mix of incentives and punitive measures to compel oligarchs to display their allegiance to their home country.
Melnichenko, who has primarily resided in the UAE, faced sanctions from the UK government in 2022 due to his alleged involvement in the Russo-Ukrainian War. Subsequently, in January 2023, Japan and Canada imposed sanctions on him under the Special Economic Measures Act (S.C. 1992, c. 17), citing his connection to the Russian invasion of Ukraine and his alleged engagement in grave violations of international peace and security.
The landscape for business people who have voiced even mild criticism of the Russian invasion of Ukraine has been complex. Some have encountered legal disputes concerning their assets, while those demonstrating unwavering loyalty have received rewards. These loyalists have occasionally been given the chance to purchase assets that the government has taken from foreign firms.
The legal case against Melnichenko centers on the intent to seize Sibeco, a company that operates multiple thermal power plants in western Siberia, facilitating electricity generation for the region. In the recent lawsuit, filed this month in the city of Krasnoyarsk, state prosecutors allege the existence of “corrupt collusion” between Melnichenko and a former government minister named Mikhail Abyzov. This alleged conspiracy happened in 2018 when Sibeco was sold.
In the spring of 2019, Abyzov—the proprietor of Sibeco at the time of the deal—was detained. He faced accusations of embezzlement and fraudulent activities concerning Sibeco and another company before the deal with Melnichenko. The state took control of Abyzov’s assets, and he remains incarcerated in Russia. In the ongoing legal case, the state is investigating potential wrongdoing by Abyzov while also scrutinizing the purported collaboration between him and Melnichenko.
Abyzov, a close associate of former president Dmitry Medvedev, is accused of multiple criminal charges, including allegations of defrauding Siberian energy companies of RBS 4 billion ($42.5 million) and illicitly transferring the proceeds offshore. Presently held at Lefortovo prison in Moscow, Abyzov has already had RBS 32.5 billion seized by the state, and certain assets, such as apartments in the capital, have been auctioned off.
A representative of Melnichenko confirmed the receipt of the lawsuit and disclosed that a legal team is actively engaged in the matter. However, the council waited to speak about the precise accusations made against Melnichenko until after the formal start of the judicial procedures.
A court hearing is scheduled for early September, as indicated by information on the Krasnoyarsk court’s official website.
In the current year, Forbes recognized Melnichenko as Russia’s wealthiest individual, with his net worth exceeding $25 billion. This significant wealth surge can be attributed to the escalating prices of coal and fertilizers, the core commodities traded by EuroChem and Suek—two major corporations founded by Melnichenko. Melnichenko renounced his position as the main beneficiary of the trusts that held these two businesses as a result of the extensive sanctions imposed by the US and the EU in response to Russia’s invasion of Ukraine.
His spouse assumed this role and subsequently also became subject to the sanctions. Forbes‘ valuation of Melnichenko‘s wealth is based on the corporate framework that was in place before Russia launched its invasion in February 2022.
